IRI’s Eguiar Lizundia Addresses Anti-Corruption Strategies in The American Interest

Focus on Institutions, Not Personalities 

The American Interest 

The year 2016 may be remembered as marking the beginning of the end of the postwar international liberal order.

The global rise of nationalism has in many cases coincided with the decline of social and economic openness, ascendant since the fall of the Berlin Wall. Across the world, voters are embracing leaders and policies opposed to freer trade and closer integration with partner nations, and have pivoted away from traditional international alliances. In some cases, this populist wave has propelled a surge of political chauvinism.

The aftershocks of the Great Recession and globalization are continuing to reshape global supply chains. Shifts in the distribution of manufacturing jobs and new migration flows have created economic and political tensions that have enabled the populist message to resonate with millions of people. Popular perceptions of corruption have also fueled this anti-establishment sentiment; the denunciation of special interests and the revilement of the political class dominate civic debate across the world.

Indeed in the past two years we have seen an explosion of high-profile corruption cases. The FIFA corruption web exposed in 2015 looks like child’s play compared to the massive scale and multinational reach of the graft and malfeasance exposed by the Panama Papers, released by the International Consortium of Investigative Journalists in April. In addition to that blockbuster exposé of global cronyism, the past year has delivered a steady stream of high-profile corruption cases in South Africa, Ukraine, and Brazil, where the suspiciously large bank accounts of parliamentarians and government officials have outraged citizens.

While only a handful of countries have made progress in Transparency International’s Corruption Perceptions Index in recent years, there is no conclusive data to indicate a systematic increase in actual acts of corruption. However, that does not change the fact that there is a widespread public perception that the situation is spinning out of control, increasing mistrust between citizens and government.

From a policy perspective, the consequences of this collective state of mind are twofold. On the one hand, the realization that the average voter believes that most politicians are corrupt has put anti-corruption at the center of the public agenda. There is an emerging consensus that the revolt against the elite will be only contained by taking at least some public steps to rein in abuses of power.

Moreover, the far-reaching scope of many of these public corruption scandals has shifted attention towards the issues of fraud, money laundering and tax evasion. Given that the lion’s share of the public money that illegally ends up in private pockets can be traced back to high-ranking officials and offshore financial centers, there is a strong argument to be made in support of decisive action against malfeasance and loopholes. Developed countries have been summoned to lead the way in combatting and deterring these offenses, and their role as enablers of this kind of corruption has increasingly been exposed.

The global push to counter the most egregious types of corruption reflects the urgency that the rise of illiberalism has prompted in democratic leaders. Faced with constituencies that increasingly demand that their representatives conduct themselves ethically, both incumbents and opposition forces are beginning to promote comprehensive solutions to the scourge of corruption.

This is not just a matter of optics: politicians are increasingly being persuaded to take action due to the well-documented economic impact of white collar corruption and the waning viability of naming and shaming developing economies without fully admitting to the role of Western enablers in global corruption. Whatever its limitations, the anti-corruption summit hosted by the UK in May was an unprecedented and ambitious effort to secure meaningful commitments from the world’s wealthiest countries to create partnerships in order to expose and prevent large scale corrupt practices.

However, the emphasis on short-term considerations and high-level prescriptions have sidelined key dimensions of the challenge. The focus on political personalities, as opposed to the corrosive effect on government institutions and policymaking, has made it easier for populists to co-opt the fight against corruption.

Anti-corruption charges are used regularly as a weapon against political opponents in autocratic systems. In Russia, critics of Vladimir Putin are regularly detained on bribery charges, including the government-appointed anti-corruption tsar and the Economic Minister. In China, the Communist Party claims to have punished almost 300,000 officials in 2015 alone, many of whom were sentenced with scant evidence.

The anti-corruption crusade needs a fundamental change in approach, moving away from vilifying people toward highlighting the institutional and social harm corruption causes: stymieing democratic development by breaking down the social contract between citizens and their representatives, reducing trust in government, and inhibiting the capacity of authorities to respond to the needs and preferences of voters. The ascension of populist platforms is just the first symptom of this ailment, the improvement of democratic governance its only antidote.

Although grand corruption cases greatly outsize small-scale graft in monetary terms, the latter is the form most people encounter firsthand. From the patient who is asked for an additional fee in order to receive prompt medical attention to the business owner forced to pay kickbacks to keep her store open, petty corruption is the form of graft that most severely diminishes public confidence in democratic institutions.

Perhaps it’s no coincidence that some of the most effective approaches to tackling corruption have been implemented at the local level in partnership with civil society organizations. Even where crony capitalism seems to run rampant, subnational layers of government and non-governmental groups are making steady progress.

There are many interesting examples of cost-effective local interventions that could be further scaled. Using websites and other platforms to report the payment of bribes, publishing official information in ways that are easy to understand by all constituents, advancing e-procurement, and facilitating direct citizen participation in government decisions have all succeeded in reducing graft and triggering appropriate corrective actions. Providing independent journalists with the training and resources they need to conduct their investigations has also helped to unmask corruption, as the International Republican Institute (IRI) recently did in Guatemala.

Convening elected officials and constituents to implement transparency and accountability mechanisms opens up channels of communication and reduces incentives and opportunities for politicians to take advantage of their authority. In Mongolia, Ukraine, Indonesia, and Cambodia, IRI identified reform-minded local leaders who are willing to partner with citizen groups to implement concrete strategic actions to address vulnerabilities to corruption. In Ulaanbaatar, engaging both citizens and government has also contributed to the institutionalization of the anti-corruption agenda, ensuring its survival after a transition of power in the Mayor’s office.

The appeal of exclusionary and illiberal forms of populism and nationalism will continue to flourish if holistic anti-corruption measures are not prioritized by governments, citizens, and activists. Reactive, top-down and law-enforcement solutions must be complemented by preventative, bottom-up methods. Naming and shaming should be supplemented with a concerted effort to engage local allies and nurture champions of transparency.

While each country will ultimately be responsible for finding the combination of policies, practices, rules, and incentives that best suit them in their attempt to defeat corruption, the rise of illiberalism is a powerful reminder that international cooperation and mutual learning are essential at all levels.

Eguiar Lizundia is a senior governance specialist at the International Republican Institute.
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